IGCSE Economics Paper-2: Specimen Questions with Answers 36 - 37 of 100

Passage

In the recession that began in late 2007 in the United States, the first main element of GDP that faltered was the part of investment called residential structures. When housing prices started falling in 2006, new home construction slowed down. In 2008, this sector had shrunk by more than 40 % from where it had been just a few years earlier.

Question 36 (5 of 5 Based on Passage)

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Short Answer▾

How important is investment?

Explanation

  • Productivity in a business is largely determined by the investment choices that had been made before you began to work.
  • The kind and quality of capital you had to work with strongly influenced your productivity. Capital is available due to the investment choices made by the business.
  • Investment adds to the nation՚s capital stock. An increase in capital shifts the aggregate production function outward, increases the demand for labor, and shifts the long-run aggregate supply curve to the right.
  • Investment therefore affects the economy՚s potential output and thus its standard of living eventually.
  • Investment is a component of aggregate demand. A change in investment will shift the aggregate demand leading to a change in real GDP and the prices in the short run.
  • An increase in investment shifts the aggregate demand curve to the right; a reduction shifts it to the left.

Passage

“Economic and social conditions are giving profession choosing criteria and should be in accordance with labor market providing and the youngers expectations and needs. Job stability, salary, company reputation, prospects for promotion or opportunity to practice as many jobs are currently most common criteria”

Question 37 (1 of 5 Based on Passage)

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Short Answer▾

Explain the non-wage factors affecting choice of occupation

Explanation

Non-Wage Factors

Non-wage factors are dependent on the choice of occupation such as:

  • Job-satisfaction: Many people took a job only if they are satisfied with company, work environment, boss, employees, etc. other than the wage factor.
  • Career Prospects: People also prefer taking up those jobs that helps them enhance their skills and bring opportunity to get promoted.
  • Fringe benefits: These are non-financial incentives given to employees such as housing, rent, transport, food, etc.
  • Gender: Though people argue on gender equality and women prefer to get equal job role as men have, but there are certain work situations when only men can able to do. For example, women may not able to work long hours during pregnancy in a construction site.
  • Job security: People also prefer those jobs that offer them security and guarantee that they are not going to be laid off from the job.
  • Length of holidays: Many countries have brought labor laws that require certain number of holidays in a year.
Non-Wage Factors

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